BJ - Earnings call transcript Q1 2022 | BJ's Wholesale Club Holdings, Inc.

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Operator

Hello, everyone and welcome to the BJ's Wholesale First Quarter 2022 Earnings Conference Call. My name is Victoria, and I will be coordinating your call today. [Operator Instructions] I'll now pass over to your host, Cathy Park, to begin. Please go ahead.

Catherine Park

Good morning and thank you all for joining BJ's Wholesale Club's first quarter fiscal 2022 earnings conference call. Chief Werner, Laura and Executive on call. and Officer; Chief Development President the Bill and Vice Eddy, Executive Felice, Officer; Financial are Bob President, Strategy statements this laws. securities may Please the call, that meaning of during make remember forward-looking within the federal we could based our that expectations this actual statements described and are and risks differ our on on These results expectations to current involve uncertainties cause from materially call. the Form SEC section of a our recent XX-Q the filed risks see and with those Risk Factors of Please for Form description most uncertainties. XX-K and

isolation on in Finally, non-GAAP refer accordance please release reconciliation with the believe the for to call, note I'll for this be to turn the refer Investors presented today's or certain information for Bob. useful financial measures in call not provide of financial that investors. we measures as over With posted today's that, that a in financial of is comparable to we presentation of on press to a with information will our most substitute prepared website measures The Please section these GAAP. to information non-GAAP intended will GAAP. accordance considered the

Robert Eddy

In you have the the Thank us build last over quarter, for morning. two to joining the transformational we continued Good driven first we today. on gains years.

membership Our membership quarter. continues eclipsing including metrics, key million all-time stronger X.X in achieving in to first get records members the new

key advantage. a remains business competitive digital Our

footprint, our expanding quickly clubs this are three We already year. opening

in consumer waning decisions network this stretching today. wallets, of our growth with future perishable stimulus recent environment a is made Our becoming being support acquisition and inflation efforts our from necessity value Burris will distribution purchasing Logistics of high and government

our club relevant more initiatives and channel key the are on to members our than result, delivering ever while membership drive value. more executing a lifetime As value to we remains

we up year to in XXXX. strong is be first in navigated was here as performance Our dynamic another the what quarter already shaping

over up and were comp XX% to quarter X%, Our first X% $XXX million grew adjusted EPS $X.XX. adjusted grew sales EBITDA to

significant sales our during made and progress in consumer gasoline We the and traffic priorities, in last and categories. strategic continued a two-year their value, are by in increase our comps gasoline growing our our The gains first up traffic gallons led XX% of retaining members on share, with and which drove by membership. driven our comp the to in versus in up the and basis. drove and clubs market into year, Our business rapidly environment price convenience stack recognize were increases further This grocery the footprint. the market XX% quarter and increasing quarter, members, continue current share as expanding delivering value of on BJ's first digital, perishable were dramatic improving

touch briefly me Let on each.

to seen as well stats count membership I've milestone reaching member are club our of Our In quarter, strong with X.X history as a renewals, combination in related grew year-over-year, this growth. driven members. strong membership We new my the million first by than as expected, earlier acquisition achieved company. as the X%

member meaningfully. to as are driving Not these Therefore, loyalty. spending are of given BJ's MFI of penetration only in first but X membership quality to here as Easy year prior well. In quarter of in terms Higher our just well. XX% and great a Higher membership renewal membership higher tier more count of quarter. improves we representing last of improvement made tier was increases, the point the valuable in growth XX% the from to membership first progress penetration year. and shy quality, members roughly in compared members we quality, as grew the quarter, enrollment XX% the per

first the per the member our from mark in time in up last quarter, year. history, fact, dollars MFI average the company's first the In for crossed X% $XX

achieving last We hit taking targeted tenured renewal strides rate, record a XX% having toward year. our are meaningful XX% also

see cohorts end increasing offset the is Within on that we are membership the those gains pressure behavior. by end we we value. search the that some of the track, for Cribs economic see spectrum encouraging lower higher as more while members and increasingly shopping than at (ph)

We will The over rates and to long-term membership power continue future. order to growth. us quarters in quality, will invest into delivering past years and foster in value the the gains count,

allows major on membership and XXX here to our perishable efficiencies our also lot long our it business. over to to our unbeatable One the fresh of network the growth can month, in I supply on meantime, opens and thrilled we we do element is to is our the through fresh is Having family. Earlier over perishable over to that run, the talent. our elevate right of having model we value mentioned to from shop food chain the our the acquisition long-term us There's a crucial members -- but our welcome key the of door merchandising are closed great Burris allow focus offering Improving last to reason our team at providing BJ's quarter the our truly us members to will a new member experience, more many chain full benefits value of supply control a Logistics. that why members. delivering clubs. foods this are provide our

year, talented two on the externally. best brands now well And up the by initiatives. our our Over as star we from recruiting merchants addition heading past very our building in deliberate promoting Merchant, BXB been to and Vegas, own best-in-class a incredibly individuals talent we as within, have team have focused Rachael merchandising Chief and

we attracting the continue my in sundries The initiatives, linked first in improvement of Head to over continuing business talent, first a best our hired improvements be priority. work of also top improvements merchandise General the last our fantastic to progress our Merchandise. general the and We at is directly to the respect merchandising on make of can transformation Growth company list quarter. this our of retaining assortments new those With of years handful to simplification is come.

increasing yet club in first shop unnecessary our choice. thus to is SKUs We're by introducing SKUs peers categories, categories there categories that typically there reducing new and we our our are performed little and and clubs SKUs where clubs. at categories and simplified choice than feel too change ability compete the Our The shop in or easier where categories looking members' efficiently to we carry much well feel warehouse in fewer more is service. to eroding quarter

of increasing As you know, is initiatives our brands and Wellsley ongoing of penetration one Farms the own Berkley our Jensen.

showcasing broaden March. Eight brands XXX and understanding competitive own and of just with cup more better high strong member all-time for of penetration can't members economic time our a our the here deepening savings deliver and extensive needs to Based in sales we quality XX% up recent a our cup savings to in XX%. to is giving value our This an own per and an better brands' than lean basis benchmarking invested one quarter already which and brands' points our success we're is traction gain to efforts of circumstances continue We of seeing XX% I against down these our of loyalty. rate. product we first our in weeks new offerings, on branded reach. price competitors. Wellsley introduced into pods example coffee in, our of A cup bringing in by Farms' own single members' per repeat example members, than think

and of BOPIC digital curbside. digital across growth channels, particularly front, we in all the On our are driving robust

that continue trips of digital also in have We our to shop and the likelihood higher members We engaged tend to more more conveniently frequently expand a and average higher with members baskets us. have make ways renewing. who know shop which members with us

significant convenience we offered We Our and shopping toward offerings as digitally-enabled like the with our growth a develop that partnership by club in long-term sales offerings believe winner. to is shopping. continues strive frictionless the new value channel DoorDash adding

period. BJ's We in one-time quarter, either Select one-year offers to a first or over the a pay grocery also XX ability for same-day fee launched unlimited members deliveries Same-Day which the

our we encouraged and in thrilled early with still adoption it's with the days, see to the resonating members. While are our efforts are rates

expansion convenience our Rhode pilot we strengthen BJ's our our opened about grow over our can initiatives will and club Year-to-date, those have Island. where and market It two then and remain half plans displays, small new Finally, portfolio we to openings. time. in with box the new pivotal operations Warwick, is on BJ's market the of clubs each estate new broader and our club. apply place across size to lessons serve real track demonstrations, three with continues test strategy product includes assortments, a the we gas as confidence in this stations,

proud next company. clubs new XX opening We expect see of continue transformation total path XX made and of we've to I'm a the another this at to a open significant year to this year.

stronger all clear quarter. executed in down. further a and value turbulent light much our validated We economic to times. our company are footprint a value and last conviction have this, These is base, prices sustainable gasoline in long-term business winding continuing, expansion benefits of creation. is are is and are the by repurchases our our membership in first In stimulus evident invest are year's digital Inflation high, we proposition. continued our This share growth path with and for

times consumer the search they search and A good industry have When believe show our categories investments fact, items. are inflation value. These the we is well-positioned this our know as example are which made benchmark in value to for $X.XX for pressured signature Select our future. by are the overall In such positions improved was internal impacting that at are the paper then pricing made competitive maintains over and quarters. pricing And for. We've rotisserie-chicken, member few value, we for item. despite our come which robust past key they business We industry-leading similar wallets us. club water, pricing

members listening Our team strength in today, their company and results and a dedication our to To are thank testament who members. the our the of to continued will team members serving all our our over With the Laura? results and to details year. outlook you again more on to that, for rest Laura of hard of work. I for it your provide the turn remain

Laura Felice

Thank you, Bob.

work. our clubs, distribution centers, of success their and like Bob's share across result for our members the hard is office. gratitude home I'd company our of First, team quickly The to

were exclude our over into by quarter increased results. and growth. sales sales quarter. Merchandise increase a for were comp sales, first of the traffic dig prior the Net year billion, over let's X% by $X.X Now XX% driven gasoline which

Comps as Our on XX% division in two-year a to was than two-year reflecting XX% and pre-pandemic led business in grocery, nearly on by the pace our higher business equates stack. XX% to our three-year sundries and nearly up normal our on X% X%, stack three-year XX% X% approximately food down a levels. a grew quarter continues stack over were which X% up where first and and a of This in and strength perishable, two-year the in a stack was approximately in settle stack particularly, first respectively. negative into and three-year by grocery, continued division comps quarter,

first and comps Our discretionary spend also points new the normalizes rainy down two-year the X general General our division a rest quarter services in core and a of merchandise the years. and clubs merchandise our on were in experienced stack from team. than Northeast quarter first played up Weather and clubs cold our towards were XX% a the base comp XX% as markets Southeastern for better across role and as the three-year weather. higher up past comps two XX%, respectively,

reiterated discussed decades. are we and experiencing quarter, of highest in last As in inflation we today, his levels remarks several Bob the

each first accelerated inflation quarter. sequentially in cost fact, the month progressed as through In we

in wide our to like as value costs outstanding prices grew making gasoline in also enabled three-year We manage key increases we new we that growth at XX% our are club, year-over-year members. membership XXX% share for plan. fuel. by overall well, than same-day Gas to continued grew are pickup in by items during pressures, and in our retail Despite increase of million over first to income price rate thrilled enabled and grew freight gas KPIs. clubs normal approximately members, margin success the the investments the to and in the Digitally combined well, gas the our significant a strong saw margins in the XX% fee these buy improving sales sales for outperformed core higher by in internal saw increased. growth with quarter clubs resulted $XX sold a XX% that business, fulfilled or the business. with services the diesel quarter we corresponded first significant while market delivery. we underscores significantly We we This have our trending approximately XX% gain progress digitally continued first and stack, curbside, renewals online, profits outpacing on are In of our by maintain gallons comp market of seeing with quarter, margin. our in made MFI the Membership

As we our our tier continue an quality of increased membership as all-time base. noted, XX% penetration the memberships high of of Bob higher to improve to

the Moving to on gross gasoline XX decreased basis margin margins, gross our by excluding business, points. rate merchandise

and While quarter. made investments passed investments was pressured during costs attributable priorities. costs Rate expenses increases, chain expenses, year, year-over-year in cost The items. quarter labor were the inflationary to strategic key occupancy incurred $XXX did our drive a we tactical on primarily supply wage we associated increased was to other majority higher of increase costs some by the the also with for make last we million. SG&A increasing

quarter Our to adjusted and cash $XXX X% million, sales first by EBITDA grew growth outsized profits. reflecting

we share quarter, net related nearly growth per for adjusted This Adjusted the basis. we in metric. year-over-year quarter on for May per $X.XX million were reflected income costs acquisition, of first incurred to a our costs was $XXX our $X which These a adjusted million X. closed on Burris EBITDA XX% and share or one-time

rate Our tax approximately normalize tax the the quarter rate included the a windfall year the year. XX%. million last to of will compared $X.X remainder quarter in of $X.X the XX% million at We tax first anticipate within benefit for

earnings growth prudently as in as to our a Our highly manage throughout P&L inflationary low -- of benefits well our highlight to share ability costs count. environment continues the a lower

have With remains with we quarter that measured levels, strong to sheet one EBITDA. year. as the inventory our of of our by respect stay business to our than adjusted have debt balance to worked as less hampered supply proactively net teams ended our net turn challenges last ahead Our chain leverage

into We opportunistically partially have payable buy our in an with heading impact earlier usual, $XX second in These of to made inflation have merchandise quarter. the a decision inventory, balance cost accounts the resulted than of year-over-year to also increase inflation net combined sheet inventory million. actions the combat of

and As flows and our our will our forward, we these first growing sheet. estate Investments our growth plan priority membership, allocate balance real funded capital going be business. by remains strong support by cash to digital, enabled

end a We $XXX buyback also had use good to we remain the believe that back and first shares excess under share expect of million buying capital repurchases million our continue of opportunistically. At remaining $XXX quarter, the authorization.

now touch year. the me current for on the outlook Let

results with stronger generally expected quarter a exception in our expectations first with than Our of line the gas business. were

averages. are we has gasoline sit historical are While we levels our long-term for significantly business first plans today, our back here profitability the quarter, as that to of line exceeded with in

of is through a increase modeling the per rest profit next quarters. (ph) the the Given the predictability that continue of gas, drivers assuming gas lack with the our gallon year, normal carry volume approach of the slight philosophical three year-over-year to we in same over of business

as and that we are to mentioned is in dynamic Bob by considerable chain market a profits propensity believe levels all of and remains member our first heightened traffic. we have in be costs. largely consideration, by fiscal said, positioned business operations, factors quarter year-over-year EPS circumstances growing membership, gravitate value XXXX strengthen favorably in excess to of waiting create navigating As grow driven stimulus. gas continue flat his including can year will gain stronger offset towards resulted customers pressures our That we also supply our margin these outlook remarks, being for believe to inflation these a variability share, into our macro-environment of record Taking and unchanged,

minimal each we acquisition to $XX deliver that of closed the approximately first the distribution the we our from will line quarter EPS From view, subsequent Finally, confident impact remain of end P&L million the expect Burris. the centers year. X, for $X.XX and for of May on and acquisition item EBITDA on quarter perishable individual

guide in is expectation flat embedded this reminder, already the a year. our As EPS for

turning made transformation to it we Bob, our our business in like confidence strength the at have I'd to the Before the company. reiterate of back and

As model, for expansion to a closing our pandemic. our structural in improvements a club revenue result mid-single growth. and a we better membership, in With should believe advantages long-term to digit footprint of the to growth the algorithm result it are prior of will Bob I profile than fundamental that, warehouse positioned back strategy remarks. This of we the turn deliver a

Robert Eddy

about some company progress thoughts. this like I'd continued are core excited remain our the future with I we conclude final Laura. making strategic Thanks, in of by the anchored priorities. to

quality, our new the providing growing are merchandising, size to accelerated broadening great ones. members working are to solidifying are existing relentlessly and into membership We by value markets our convenience further efforts, our we our we digital in we're brand reach our and and improve and

efforts fundamentally as through business the Our delivering with we best, great the business served in I do continue well members our current value. remain model And resonate we pandemic. believe strengthen us our to to on focused environment will what

tough. to quarter business. back growth operator our As members, their them I'll our honored alongside was our traffic as unbeatable purchasing we our help the positioned to team I'm stretch turn and now the the when over to serve clubs provide believe the and our value, working dollars call evident Q&A during session. will we I'm our in and of members begin first to continue grow favorably remain we be to across incredibly times in proud are

Operator

you. Thank Perfect.

Robert Instructions] comes of [Operator our at session. Q&A Bank from America. first Please We ahead. will now And start Ohmes go our question

open. is line Your

Robert Ohmes

mentioned seeing that two then And and end Great customers? was, the pressures. higher you you Good Bob, how the second about you're question I Can and the different lower seeing of end versus the the timing you is some -- more color about up changes help Actually, a on think early the One are through talk more quarter. margins customer think behavior of costs that little to questions. Thanks. morning. on just, the more or rest move maybe the year? buying could and that impacting as we we going inventory get impacting not that's how

Robert Eddy

environment. had for Thanks Robby. quarter had from perspective. Look, Hey, We've topline demanding we your fantastic questions. a incredibly an a

year, Our two membership penetration five of was all The membership tier off the terms we the against Renewal last of up QX. incredibly quality higher against the that charts The up count right. membership good, up and in things track. Easy

If you are what better sort see headwinds income we some we lower The we core that of of be. spending hypothesis were saw. would that's core into see peel house roll-off the a exactly bit that well what in versus track All to your a these from Every we question with top is of perspective. was, income they some the and little income tailwinds the at thought we members back terms and higher But that cohorts and folks given quarter we stimulus, had the would we one cohorts also the doing? would get track going expectations. the than income of our

We that. higher in pleased So income saw see we're more as very traffic for the tough value they times. these search in cohorts to certainly

saw as as traffic or it money price tremendous of to a in a saw drives about levels and of we've weeks the as people well. certainly, we saving normal renewal certainly you gasoline the world of in our driving drives amount traffic, also care get of But gas gas more clubs rates past that well. gas that a We that on in seen couple month

traffic certainly, from pretty So all a from quarter and perspective. perspective, membership all, perspective, a from a a in spend strong

on question then maybe and fill pick inventory, second Laura quickly Your can I'll in.

a in inventory general year a comment This is XX% perspective. little don't business made I'm from certainly Our supplies year-over-year. We through in thing, then choices about year got I'll more was And general inventory from given we've bit extra is that worried of is. as of large business to last inventory tremendous that ask heavy. perspective, business. was light. a food portion more Laura strong up coming is about bit And well. inventory. about our the Maybe food to A our the some merchandise little we up. markdowns merchandise a probably cost bring strategic just But Last how going see

Laura Felice

Yeah.

got that merchandise might is The I you add Bob. comment general right, think context a thing made. the I on little only you

we well that said, feel Bob positioned. I markdown think feel think now. I is of risk don't it we inventory, there on right would that that as We about. okay So emphasize

general we merchandise about based fashion is Our the the year. look as heavily to or as something we of remainder inventory not risky that forward think

Robert Ohmes

Thanks helpful. really That's it. Got so much.

Operator

so Thank your for you much Robert. question,

ahead. Please question Benedict comes next Our Baird. from go Peter at

Your line is open.

Peter Benedict

morning, question. numbers you'd And guys. would for Any and about on then was inflation how great if MFI, why merch dollars sure reason one your build maybe not in inflation. be continue around Good quantify wouldn't this year? record you growth guess fee Hey. obviously, Thanks comps. what MFI the thinking just talked levels, the you're about When you. those just in be first on growth I impact the the Thank sequentially income, on taking I'm to there. able to

Robert Eddy

Thanks questions. Pete. the Hey, for

a was inflation quarter. on the impact big certainly, So

about point, think at it's maybe about higher meaningfully we points X of talked this X had I inflation. in think than of QX, points inflation so that

cost to did our a here, our from it's As consumer But and environment. think higher continue we managing suppliers, through. frankly, in month goes, time increase we merchants it. it going -- tough that's Laura I It more talked the We've about, that I to overall probably what every with through more has pass the we environment. most the the tough it -- have and drives think operating to drives year, to increase job and a a But able managing of the team done spend fantastic managing inflation. pass been of our

perspective, see results members of do that new navigate for of help year I from membership tough clubs were proud the renewal I that you and opened environment. and per our as higher. do we MFI I said I Laura our Laura's a mentioned. rates to we member, fee the bit need we a including expectations a get front pretty better remainder during this members had, Certainly, carry what the should much think should think don't as to as than ton in to own and new we're three We on little performance continue very that and dollars I to the consumer able thought all year of are comment. we can but things to through jump initially want think we earlier, let well. in guidance, exceeded Maybe we do the pile we I'll that MFI-related, of the to

Laura Felice

Yeah, only of I the it is think rolls might MFI add into I The right, the to timing thing Bob. P&L. and think how that's about the

we benefit year the So quarter the getting of in all of from fourth last through. we of year and record members some in last that the of rolling that we're levels had the is fourth added from those coming quarter

is included members So steps of all we're helps. all that happy to It the membership I a really renewal I should a fair year thing full about, said that all from program about of, our certainly in the and including, that one that of is talked are that we think easy think, continue and and think how point it. with Bob everything and

Peter Benedict

If one the comments, and just pricing just could, quick Bob. on inflation the No. helpful. That's follow-up, super I

right where have investment and was price curious maybe where most going some they You and Thank strategic in that's I'm gas you. are useful that feel talked like to you now relative gaps about been? how the maybe on. just grocery

Robert Eddy

our every our than out. they've better a been last for figuring are better that. the are year. very quarter a done team Thanks lot managing a And gasoline. where time certainly, perspective. gas, from something pace great money that's on, put well. something But we analysis a simply make Yeah. spent to to It of is that's do of No It's traffic. it's that on our our traffic every doubt. to a into And can as driving that inflation, we a job important job of tremendous last than of gaps to drive as value not it sell week, low point, in about look I obviously, quarter, that buildings. feel bring asking it. pricing up at the of we lots gap you better day, nice but detailed while, as has gasoline and our price we than We given And members. every We we provide amount but using a wonderful amount to price with during quarter our this a tremendous look did

a and those stack visiting get right, on during the trip. up I to the different gas built quarter, XX% basis. have get to also cardholders our And point, promotions this get We've folks to inside million portfolio our a day gallons We really over of $X.XX co-branded credit over think done same stations up X.X card number try XX% during almost at that, are off gallon our this every at who pumps. two-year the people club show a

that on pumps the we effort and Just that and that the two merge convert day at value take our businesses a every those store. to really tremendous registers into show traffic inside

Peter Benedict

No. I'll much, so All on. guys. Thanks That's right. pass it great.

Operator

much Thank your question. you for so

at next Davidson. from -- go Our Mark ahead. D.A. Baker Please Mike comes question

Your line is open.

Mike Baker

Great. Hey. Thanks, guys.

the much going that to why they're to a Target their rebound they see from if do that don't on concerned risk said start term allowed May, I at of that's see think general down you how seasonal are lot and you'll seasonal and Maybe question. this impact couple, have a them inventories up follow? you is of risk. down, the does has one that too mark suppose, competitive in some were other there. massively and But you you retailers of all to better Is to One, of reason stuffs how Walmart, have a and though merchandise you marking that that and do, through markdown been is and stuff don't markdown follow-ups. short even lack a and work your product weather So the standpoint,

Robert Eddy

Mike. Go Yeah. Hey, ahead, Laura.

Laura Felice

Okay. My general was markdown comment Mike, it I'll and so Bob on merchandise heavy maybe is let that from seasonal a jump earlier the right. pointed risk, in I got say, jump in, no you perspective. it then not after. being would fashion at

of everything about summer. think So spring, kind

their and comments on operating I on with Your and regular Target something normal we think that's basis. Walmart deal cadence, a markdown

that what's where now, to we're feel to as markets, kind out members. where we'll continue okay goes. will are the quarter But of our figure We on, sure and make value we the price going watch see and about the delivering of we right right

Mike Baker

there harder there is lower What that's in Okay. could down? income customer? follow-up, Is on per know maybe in to just more And terms there a income lower than that assortment, but see is there what for Thanks. any you're your seeing the that little trips I Is fewer bit trade lower ask transaction? you detail down? there one limited units trade give are of, if others? I on Can you a exactly more seeing customer.

Robert Eddy

Yeah. Thanks, Mike.

more habits trips. As cohorts. -- I said earlier, seeing across income we're we're seeing great the shopping I’m

and it's as is any shopping look it and expected, trade the doesn't We I the that something that's right, us. surprise what the income of pressure happen. gets that That's is thought it's And up basis worries to we seeing more the us. said, cohorts tremendous, better part not the characterize we would with a meaningfully at the value in that but for making I right people up see certainly bottom quarter. in pressure, down, necessarily cohorts a that It's frankly of the mind points. own benefit that lower then penetration what brands' would we are higher as than undoubtedly we are searching for the income house. bit traffic income driving of XXX higher is that little take part at expected a And cohorts at of our and us business little saw not the gains during

Mike Baker

sense. you. Makes the color. Appreciate Thank

Operator

question. your for you Thank

from question next Edward go Wells Fargo. Our comes ahead. at Kelly Please

Edward Kelly

it's question, you're this, on part then of start of of quarter. quarter As on chain. Could year? just you rest And well that merchandise that? did and margin. you the changed, Can part Nice with expectation as Good does talk pass-through about first And Hi. incremental second can all morning, we pressure as inflation mention you my about thinking guys. the of accelerating? supply how as its quantify how

Robert Eddy

Maybe I'll morning, Maybe Ed. any -- Laura set good with and specifics. fill let in the first tone

through did that a We pretty double-digit proud effectively probably tactical inflation rational from quarter. the do inflation to meaningful that's been talked about item margin able more thing a were that. so certainly, able do particular sorry, along in haven't been pass it's the most because ways it such the to seeing part, I we've We and, the things. inflation (ph) I We for So in through price those -- off think as are and of we're we all a membership We've headline the basis. we that investments and perspective we'll to make similar pretty figure a bunch during categories very the investments. where paper costs. to given rotisserie-chicken example we chain and supply far. where moved a members, manage to bottled of seeing said, making pass continue of our water things But in out landed

without We it in it and the if $X You can't We seeing that. certainly the (ph) second in of prices those first take to saw quarter. more quarter beyond seeing diesel $X anticipate fuel continue. from

is that, the I markdown think cover then from but is see work that we a We about risk potential there, lot today. which based we to talked limited pretty And goes. longer risk on will what think the we've obviously particularly

if as kick from with it where a in me there. over starting fill let can can sort of she she to might Laura, point, second we land that the go and So thinks quarter

Laura Felice

Yeah.

prices So rise, not other would the I on the just you margins there's in quarter, as pressure compare it Bob certainly about last so diesel think from is in Two much merch what can term. there. as said, pressure some about we I I add to certainly near there second think as do -- think, those, some things, year, primarily I

we an we about on from because, we an that think import don't perspective relatively basis. you are just products lot a from about, insulated import import of talked a we've annual our business, mix, have As

at feel feel think about side supply well, continue we that QX. So think flip can continue And that the while and good that actually drive to where it and or as about our there, continue across other supply issues will continue say that patterns, will on will will traffic. that. we in of pretty that we And is I'd then, to members, prices as We that least and stay are all to that pressures to chain rise we look traffic margin, they value that is the now, provide our with continue of chain see think the that thing peers. gas will there QX the are they in we consumers probably merch we saw

the on story think I margin So got there. merch you've

much pass-through we'll I think the We every only can. in we of We that thing and quarter. we is other will continue watch something to watch. that's react can your we weeks, certain do we the -- through, in to it investments watch months pass about on how first we have continue we as the day. and categories, if we'll point where continue did make it continue to And to inflation

Edward Kelly

Okay. A up follow me… from

Robert Eddy

jump of we're quarter in put we first Laura I'll a point expecting than rate back in maybe on saw bit pressure one a bit said, finer Ed, -- second margin what second little just more in quarter. little the the and a for

saw prices second first down in by degree we that a the bit second stay in We're the little So we’re that forecasting sort but of quarter. the the than more a of sales gas traffic line chunk first gas. I the that the bps driven again was in quarter think To down that quarter, quarter. our would in benefits XX high,

sales margin a more or a little we rate little less as bit look the at initially more and So thought, less probably than we bit QX, same bottom line.

Edward Kelly

quick Okay. seven one you've months clubs, up for or you clubs Great. And last then opened in new six on so. the just a

kind seeing Just thoughts what there? on of you're

William Werner

Bill. Hey. [Multiple Speakers] Yeah. This is

Robert Eddy

fill and our team footprint. of estate let incredibly expanding proud Maybe real has team I'll the it overall the We're progress our Bill in. off made start and of in

year the you Three As last done clubs just doing job been forward look proud XX of able last this getting great And clubs them months, what this this since route year. We said, in to we've to we've alone accomplish. a we talked, quarter. spectacularly. job to in quarter, next and a is six great and of each in very XX more see about

don't why from Bill, there? So take you it

William Werner

Hey, in have ever with really the Sure. couple last say, of campaign our membership results been probably Yeah. opening Ed. Listen, capped Lake, weeks week what was in Florida. best and would our good over last the off, Lady I

So as been promising the so both sales levels well membership as the the really, have really and far. clubs

So really team and the as are Bob of clubs year. of has mentioned, really the opened rest with the work results, excited the the happy the here put for in, proud getting in

Edward Kelly

Great. Thanks, guys.

Operator

so you your for much Thank question.

go Goldman Our Please next Kate Sachs. question at ahead. McShane comes from

open. is line Your

Kate McShane

know where you you, little had tougher was was a time bit question. cadence curious, the throughout when -- we if maybe for of talk taking Thanks the QX year. last spoke about compare I Hi. I comps I quarter. with our could think, thoughts the quarters one of you your tougher expected around a

we you're top has quarter comes each when changed the Just it about guidance -- for I the line year-to-date, kept the thinking know how if there? but anything just to

Robert Eddy

Kate. Hey

over and thought QX it general I same then likely a Laura and second. QX it's -- in We would just that then be would strongest negative and think QX comp. and be the I'll QX kick the to our of by followed about

in the the albeit of the a bullish more and little QX where level business. traffic on general we're think I trend given of that still inflation comp holds the that saw we

me over the So sort Laura, for can she it expectations QX. of in kick let to fill

Laura Felice

Yeah. right, That's Kate.

think cadence I Bob of the a perspective. is So gave just that framing from it right

there think inflation. rising come I a from is big or prices will that piece

of we talked So we lap kind forward. pressure cadence it kind sundries what I a would a where certainly last was, and think continue QX, about QX, perspective TYLY from QX, about to QX from be then year we hanging we'll will of around have higher. QX pull as think of off that

So lowest we QX as now. it in review

Kate McShane

Thank you.

Operator

Perfect. question. so you Thank for much your

Our comes next Please Gordon go at Grom Chuck ahead. from Advisors. Haskett Research question

Chuck Grom

about you you if driving was And Good some the comp the to wondering Hey. weather then, period? I And comp, and you if Thanks cadence between seasonal could started the the lift the unpack month started of that in improve. ticket. a comment morning. on May, Great to now talked of just traffic traffic the provide now Can the quarter. lot. throughout comp

Robert Eddy

So, hi, Chuck.

think say April was and the the month, first you -- I ratable it February month, better -- that's So across was were March was the difference, a than QX the lower. fairly although actually comp meaningful quarter, but it's wouldn't last certainly, March.

here of is service the that’s where sit mean, July but we range good, Memorial early Day and QX it As in service May, -- May a look holidays in I Xth the and quarter is comps two the very there.

the you So in holidays, chunks, of hit it to well. comes really have both sales quarter hit in come the -- those

this remind we anything was? they where said, not are I your sure question And read me what I'm So into point, I looking are fine. second at would as although,

Chuck Grom

ticket versus composition traffic the Just the in quarter.

Robert Eddy

right. That's

entirely is traffic driven higher pleased comp the by cohorts that, membership was that basket as denominated and the more and obviously, the growth in by really So traffic. flat all benefit saw the gains, so it gas within We're with membership well. rest about more our trips was spending and we in income almost making denominated of driven

Chuck Grom

now And more do how you amplifying I you has who the it than in like why gas hours. are is conversion more the prices the past? mean guess gas in Okay. for XX% share you're roughly does you gas in I guys? for Costco the club people in you talked seen shop past. like I seem the about case gaining than maybe guess, that maybe Great. buy of think And guys have like you've

Robert Eddy

Yeah. It starts Chuck, value, with right.

entire people Certainly, we're station, we've those We didn't gas shop the the of industry, very gas a we're for safety have with think club more the have a get to the gas beginning really box. that things growth. it it was XX% you of We couple you prices from the where are on credit in tie than layer totally you the us the everything of the do been together actually, give the XX% -- your try, gallon value a with stack benefit, like our consolidating years. all card a model best pleased flag beginning XX% on all, are the growing trips doing really didn't what's pandemic, perspective, at gas need perspective. that driving the understand to it. the promotionally co-brands we -- was of Undoubtedly, around, business But some from and one-stop a proposition can people get you that And that during we're two-year inside unexpected. gas allowed I the growth gallon quarter, layer understand

on is day the are one-stop times value great and basis. do our that and to shop of a all tough So We give that to value. made specifically business every the very and was for and it see These back club environment pleased ties business for. this our consumers it type

Chuck Grom

then And Great. me be in an -- just, quick gas of year? improvement correct, gained, one follow-up balance you're for not would gallons continued improvement underwriting just for Okay. the the

Robert Eddy

gas perspective is modeling from of sort always a normal from increase profitability gallon but continued we said warranted we're do prepared we're in as gains here in her some XX% sort We to profitability sit And model, back we today. as perspective. to in it not, haven't to per model think We're we a gallons. model as of remarks, Laura gallons

prices don't parts in yield they as prices to in huge of a a were typically fact, gas money fall, as money when to gas higher windfall losing If when modeling not quarter know, we tend lot fall. That of in we margins usually, gas every rise, the make prices. you first and we So day. were

here. So historical what this normal modeling point. We're anything stance from we'll at not than our happens see greater

Chuck Grom

lot. a Thanks Great.

Operator

question. Thank much your for so you

at question go Please comes Paul next Citi. Lejuez Our from ahead.

is line open. Your

Sorry. your audio we're your any any not getting Unfortunately, from from receiving line. audio still line. Paul, we're not

go move Wissink at will we Please on So to next coming Stephanie from ahead. Jefferies. question

Blake Anderson

overall question. our first wondering, that. the how Hi, Thanks just on flattish guys. I think growth well. versus was tough And that on It's versus ask ticket in about or to should number how I if as follow Blake for just of might that didn't we any that to on up a affected Steph. impacts Wanted compare for mix the know terms was traffic, taking inflation? there's ticket your expectations? have

Robert Eddy

Blake. Hey,

they're very look and pretty categories a down like that, unfavorable comes flat, longer, general environment our were place. cover, units comp any with given with the lapse in folks units where Outside cleaning, there. units given aren't bit Certainly, plan. bit to certainly, line PPE fine are strong. continue expect that less the you more that point significant merchandise that when and the underneath declines masks And buying would if four, wearing for that driving was growth sanitizing doing It means traffic over quarter you and a the as our the ticket is on certainly, So traffic exceeded see we're the estimate to all I are down products facing together. your of up, unit or our as not the all unpack you

seen, we've probably love healthy. the the I business is pretty good the traffic I'd membership that's So given see to that bet. and I think gains continue a growth think

Blake Anderson

more. up and one That's to super it. helpful. follow I And then have on just that Appreciate

maybe you penetration merch, the you anything of categories, the of more tickets you're if how trended talk to within talk know lines didn't business? And I general those categories that if any things other On or build some you any that mentioned as the merch. of any the could the some PPE didn't along about you really maybe the maybe electronics just throughout trying I or increase more, general bigger out quarter, know could but of

Robert Eddy

that with flying up Look, last was I comp against money free all around GM a tough year. the Yeah. think is

in what home certainly, the would last expect expected, the negative So particularly across was given business, came comp you happened year. the categories that

or or And the of not whether the furniture a membership or So think home some They had below than our ones. categories about given those tougher and the expectations. other go were you traffic that showing meaningful to seasonal the look of value we've rest talked forward perfectly year. future about, through best go those and categories members the I we in the we they're the fine think our as electronics, for

Blake Anderson

I still second Are last if Got gas. normalized you've talk was quarter. into you if talked benefit don't that. I don't could about know traffic it. I you from a of kind here about profit in know it. And then gas one mentioned on has you seeing May? know the

Robert Eddy

of traffic The to price the correlate of tends the to gas on gas, profitability benefit absolute to gas. not

So going and up week they've past remain prices the been certainly, fact, or in high, so. gas for

seeing still gas our people gas gallons cross and then get where we're in come and in And and so improving shop folks stations to improving come buildings. into certainly, our

that so to happening We here see May far. continue in

Blake Anderson

Got it. Thank you very much.

Operator

Thank you for your question.

Please next at ahead. comes Our question Katai from go Krisztina Bank. Deutsche

Krisztina Katai

Congrats guys. on Hey, have do promotions I on running gas. a we see did you a several good quarter. on the mean, side. follow-up I fuel

your kind any customer way lower how a building bringing today. secondly, any limited also And further to have average on wondering it's is much did was what potentially signing So just accelerating risk is at consumers? both say I the I the what traffic it consumer inventory and as different mid-to-higher-end if you're curious, contribution customer to the based end, in factored seeing weakening markdown of but potential you're at receipts, And you But versus was the you that's in quarter? of a quantify in, now? up there if right gas's then

Robert Eddy

Yeah. Krisztina. Thanks,

the take question me first. gas Let

see a we've So, traffic underscored year. every that we forward. business day. about a every the it there's seen continue world showing get gas is members street use expect corner. as into or it's that to or can don't avenue and because I a make quarter you day money care price an our to any going best it's week particularly care of tremendous I that we the in gallons the right, earlier, And in in on value as ton or and gains we -- most in said about I we that the a commodity people as buildings, if

show people the in giving ways the way? us effort. in that people station a of has a tie When get the past co-brand per is. we $X.XX time try big is, gas thing more we've with card, great box price Are card what for what credit effectively people promotions and now, a a purchases. credit And of further actually, as between They for all discount that into to their and been bad of several there gallon get gas our that trying tie single up over with So and love said, ago co-brand several couple a box we The even understand a you the put day. is one We good really how done to do benefit. club. good ones stalwart years gas of has ideas periods together more years you there gas Bill the meaningful value? the every

people those about So certain basket really if the you you by certain value showing by we that It's other the again, inside item have decisions a promotions box better about and -- we're have our store. that of value of sometimes $X.XX do get uneconomic every pumps, make our the a you and where knowing then We and the suppliers. can all per are the value, funded some day are very to emotional you by ones purchase get where gas. advantage take buy on particular It's when items funded best suppliers. great showing at a off discount trying even size, those gas, get into you

gains do not profitability traffic, to balance that always We'll the continue the with So get we traffic going membership we'll that gas overall and again, the and from we're continue of on profit. to to that. bet membership But business.

wholly in about is intentional. some we've was Again, As business being point food don't would time. GM tremendous not some dramatically so, but we talked point, of liability that that high which at about business, markdown touch than have a bit The you see inventory, at of inflation, and this are this higher a again, we liked. little think

time our that We have be this at what in membership at that continues taken our our given from and best point best we cohorts look see guess. to

perspective. from modeling little QX QX a look spending are to We a bit like

then the house. a top So bottom of some bit weakness little the house part and in strength of of part in the the

saw So now. different And that's out, how play than QX how we we QX. what certainly thought it's think that's don't in the year would that's in going I

Krisztina Katai

Great. much. Thank you so

Operator

Perfect. for Thank questions. you, Krisztina your

thank our Q&A And terminate call. session. now this to everybody concludes joining. will We like for today's I'd

may now You disconnect.

BJ's Wholesale Club (BJ) 19 May 222022 Q1 Earnings call transcript